EntrepreneurshipHuman Resource ManagementManagementUncategorized

Broad Banding: Meaning, Advantages and Disadvantages.

Broad Banding

In this article we will discuss about Concept, Meaning, Advantages and Disadvantages of Broad Banding.

                              Meaning

Broad banding is a process of combination of number of related jobs into single pay band. Earlier there was a traditional pay structure which contains number of salary structure and difficult to maintain for organizations. But now,broad banding  consolidate number of salary grades into fewer bands. This structure divide number of pay band into small bands.

In Broad banding,Spreading the pay ranges into wider but there is less overlapping on other pay ranges. Broad banding evolved because organization wants flatten hierarchies which lacks promotional opportunities. So, Broad banding helps to increase in pay without promotion which means it provides non-promotional opportunities for employees.

Advantages of Broad banding

 

  1. Broad banding is a process which consolidate number of salary grades into fewer.
  2. It spreads pay ranges into wider but less overlapping with other pay ranges.
  3. Broad banding evolved because organization wants flatten hierarchies which lacks promotional opportunities. So, Broad banding helps to increase in pay without promotion which means it provides non-promotional opportunities for employees.
  4. It reduces or streamlines hierarchy
  5. It helps to keep employees motivated.
  6. Broad banding is a simple
  7. It is time saving

Disadvantages of Broad Banding

  1. Lack of promotional opportunities:Due to reduce in streamlines hierarchy, Broad banding reduces promotional opportunities by converting larger pay band into fewer.
  2. No awareness of external market rates:In traditional pay structure, when pay is designed we consider external market rates which means compa-ratio tool is used to see that what competitors are paying but in broad banding that is not considered.
  3. May leads to inequalities: Broad banding process lacks promotional opportunities which consider number of salary grades into fewer. In which we consider number number of position into single band which  leads to inequalities.

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